Last updated on October 16th, 2017 at 11:43 am
Thasos Group, a data intelligence firm, has published a new research report, “Competitive Impact of Lower Prices at Whole Foods,” analyzing the number, composition and behavior of new customers at Whole Foods stores following significant price reductions in the wake of the chain’s acquisition by Amazon in August.
Key findings of the report include:
- Foot traffic to Whole Foods increased 17 percent year-over-year during the week of the price reduction beginning on Aug. 28.
- As of the week ending Sept. 16, foot traffic decelerated to 4 percent year-over-year, but remained elevated relative to the three weeks preceding Aug. 28.
- Walmart’s regular customers accounted for the largest percentage (24 percent) of Whole Foods’ new customers in the week of the price reduction.
- Among Whole Foods’ competitors, Trader Joe’s saw the highest rate of customer defections; on average, nearly 10 percent more daily customers of Trader Joe’s defected to Whole Foods in the week of the price cuts relative to the week prior. The same calculation for Sprouts yielded 8 percent.
- Whole Foods’ new customers overwhelmingly belonged to the same upper-income demographic as the company’s traditional customer base. Defecting customers in the week of the price cuts came from the wealthiest segment of each competing store’s customer base.
Overall, the report finds that foot traffic at Whole Foods spiked sharply following the Aug. 28 announcement of price cuts, driven primarily by new customers, but has since settled in at lower, but still elevated, levels. Walmart, Kroger, Costco and Target provided the largest numbers of new customers, while Trader Joe’s, Sprouts and Target saw the highest percentage of their own regular customers defecting to Whole Foods. The report found that the price reductions were insufficient to attract new kinds of customers; new customer demographics (including income levels and distance driven to a given store) largely matched those of existing customers.
| Top 5 Sources of WFM’s New Customers, Aug. 28 – Sept. 3, 2017 | ||
| 1. Walmart | 24% | |
| 2. Kroger | 16% | |
| 3. Costco | 15% | |
| 4. Target | 11% | |
| 5. Sam’s Club | 5% | |
| Top 5 Regular Customer Defection Rates, Aug. 28 – Sept. 3, 2017 | ||
| 1. Trader Joe’s | 10% | |
| 2. Sprouts | 8% | |
| 3. Target | 3% | |
| 4. Costco | 2% | |
| 5. Safeway | 2% | |
“Knowing which stores new customers have defected from, what income levels they represent, how far they traveled to get to Whole Foods, and ultimately, whether they will continue to shop there after trying it out, are invaluable pieces of information for both investors and the stores themselves,” said Greg Skibiski, Thasos Group CEO and founder. “We all know that Amazon’s acquisition of Whole Foods has the potential to be a gamechanger in the grocery space, and in the ‘brick-and-mortar versus online’ battle more broadly. It will be extremely interesting to watch the winners and losers emerge from the data over the coming months.”
Founded in 2011 at MIT, Thasos is an alternative data intelligence platform that transforms real-time locations from mobile phones into insights on the performance of businesses, markets and economies globally.
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